Complete Report

Summary

Of 65 Medicare-participating hospital cost reports with outlier payments that qualified for reconciliation, TrailBlazer Health Enterprises (TrailBlazer) referred 56 cost reports to CMS in accordance with Federal guidelines. However, TrailBlazer did not refer nine cost reports that should have been referred to CMS for reconciliation. Of these, four cost reports had not been settled and should have been referred to CMS for reconciliation. We calculated that the financial impact to Medicare of the unreconciled outlier payments associated with these cost reports was approximately $2.8 million. The five other cost reports had been settled and had exceeded the reopening limit. We calculated that the financial impact to Medicare of the unreconciled outlier payments associated with these cost reports was approximately $6.7 million.

Of the 56 cost reports that were referred to CMS with outlier payments that qualified for reconciliation, TrailBlazer had reconciled the outlier payments associated with 31 cost reports. However, TrailBlazer had not reconciled the outlier payments associated with the remaining 25 cost reports. We calculated that the financial impact to Medicare of the outlier payments associated with 24 of these 25 cost reports was approximately $31.8 million. We also calculated that approximately $660,000 was due from Medicare to a provider for 1 of the 25 cost reports.

We are setting aside approximately $6.8 million in outlier payments associated with claims that we could not recalculate.

We recommended that Novitas Solutions, Inc. (Novitas) (the Medicare contractor that assumed TrailBlazer's responsibilities), (1) review the 9 cost reports that qualified for referral and, if applicable, determine whether the cost reports may be reopened, reconcile the associated outlier payments, and refund the amounts due to Medicare; (2) reconcile the outlier payments associated with the 25 cost reports that were referred, work with CMS to reconcile the associated outlier payments, finalize these cost reports, and ensure the return of funds to Medicare and to the 1 provider; (3) work with CMS to resolve the $6.8 million in outlier payments that we could not recalculate; (4) ensure that control procedures are in place so that all cost reports with qualifying outlier payments are referred and reconciled; and (5) review all cost reports submitted since the end of our audit period and ensure that those whose outlier payments qualified for reconciliation are referred and reconciled in accordance with Federal guidelines. Novitas described corrective actions that it had taken or planned to take in response to most of our recommendations.